Past and modern lottery and gaming systems are beset with problems. A typical lottery purchase and redemption transaction is illustrated in FIG. 1. As shown at 11, a lottery ticket is purchased at a point-of-sale or kiosk station of a participating retailer. Playslips may be involved for those players selecting numbers for a lottery drawing. As shown at 12, the ticket is played. If the ticket is an instant ticket, it is played by scratching the surface or other means to determine if it is a winner. If the ticket is for a lottery drawing, the player awaits the results of the drawing to determine if the ticket is a winner. As shown at 13, players with a winning ticket can redeem the ticket at participating retailers, or for higher prizes, the winning ticket is redeemed at a lottery claim center. In the United States, federal law delineates between a high tier winner ($600 and above) and a low tier winner ($599 and below). By processing the high tier winners at the claim centers, taxes can be appropriately withheld pursuant to legal requirements.
Gaming with physical tickets exposes lottery operators and system providers to losses due to theft of tickets and fraud. Physical tickets also require dispensers and/or kiosks within retail environments, which can overburden retailers in their efforts to free up space for saleable merchandise. Kiosks and other physical devices are also expensive and contribute to high infrastructure costs for retailers and lottery and/or gaming service providers who must buy, install and manage these devices. In addition, lottery service providers must build, maintain and upgrade proprietary networks in order to service their customers.
The processing of lottery purchases and winnings is also an arcane function. When playslips and/or cash are used in the purchase of lottery offerings, the participating retailer must generally provide a manned POS terminal. If a given ticket is a winner and associated with a “low tier” jackpot, the participating retailer must be prepared to make payment to the player presenting the ticket for redemption, even if the ticket was not purchased at the retailer's location. While the redeeming retailer is reimbursed by the lottery operator (e.g., the state running the lottery), and further while the redeeming retailer can net its lottery proceeds against payouts during a given week or other time period, it is possible that the retailer can be temporarily out-of-pocket for the difference between paid winnings and lottery sales. Further, the retailer must staff the POS to handle the redemption transactions. For high tier winnings, a player must fill out paperwork at a lottery claim center, where the lottery operator performs various background checks to confirm the winner, taxes and other withholdings are optionally deducted, and the winner is then issued a check. Such steps are inconvenient to the winner, and add to the cost and oversight requirements of lottery operators.
In addition to the above, lottery and gaming systems generally involve anonymous players. Not only does this facilitate undesirable behaviors (e.g., addiction, tax evasion), but it does not allow the lottery operator or retailer to know anything meaningful about their market. If demographic and other information could be collected about their players, lotteries and retail distributors could more efficiently and profitably manage their operations.